Hong Kong stocks edge up 0.5 pct, AI surge fails to spark wider rally: analyst

Hong Kong’s Hang Seng Index closed slightly higher Monday, lifted by gains in an AI stock, said Timothy Pope, a market analyst for China Global Television Network (CGTN).

The benchmark Hang Seng Index added 0.50 percent to finish at 24,842.67 points.

The Hang Seng China Enterprises Index inched up 0.02 percent to 8,375.74 points, while the Hang Seng Tech Index rose 1.28 percent to 4,765.58 points.

“Some of the regional markets enjoyed a strong relief rally today, but Hong Kong wasn’t really one of them. The Hang Seng added 0.5 percent. Set alongside the mainland gains, what we saw in Japan, and a 5.3 percent jump for Korea’s KOSPI 200, the Hang Seng was really limping along at the back of the pack today, and despite all the good news it still looks very range-bound and unable to make much traction above 25 thousand points,” Pope said.

Pope noted an AI debut surged more than 30 percent, but the rally failed to lift the Hang Seng beyond a modest 0.5 percent gain.

“There was one very clear winner in Hong Kong today, and that was Knowledge Atlas Technology, also known as Zhipu AI. You’ll remember it’s only about a week since this stock started trading on the Hang Seng and today it was up more than 32 percent. That’s because the large language model AI and AI agent developer has launched a new model which it says will be released open-source. But really, that wasn’t enough to spark significant gains for the Hang Seng today,” he said.

A leading Japanese economist has warned that the Bank of Japan’s anticipated interest rate hike will not address the country’s fundamental economic problems, calling instead for structural reforms and stronger support for small and medium-sized enterprises.

The economist’s comments come as the yen exchange rate continues to hover near 160 yen per U.S. dollar, with Japanese media and financial markets widely expecting the Bank of Japan to announce a rate hike at its monetary policy meeting on June 15 and 16.

“Japanese political and economic scholar Hamada Kazuyuki said: “The future trend of the Japanese economy is also affected by factors such as rising crude oil prices and inflation, and there are no signs of these problems being resolved anytime soon. If left unchecked, they will develop into a serious inflationary trend. This will not only affect enterprises but also the daily lives of ordinary people. Therefore, in order to curb these impacts, the Bank of Japan is taking countermeasures and adjusting toward the direction of raising interest rates. However, whether these measures can truly be effective still remains highly uncertain,” he said.

He also noted that the operations of small and medium-sized enterprises in Japan continue to face pressure, and the overall recovery of the Japanese economy is filled with uncertainty. The Japanese government’s model of relying on debt to rescue the market only addresses symptoms rather than root causes and cannot solve the fundamental problems of the Japanese economy, he added.

“More than 80 percent, or even 90 percent, of Japanese enterprises are small and medium-sized enterprises. Only a small number of large enterprises have gained profits from exchange rate fluctuations. The vast majority of small and medium-sized enterprises are already on the edge of life and death. Therefore, without more adequate support policies for small and medium-sized enterprises, it will be very difficult for the Japanese economy to achieve recovery or restoration. The current government is in a rather difficult situation. Originally, it said no supplementary budget was needed, but as the economy deteriorates, it has no choice but to rely on supplementary budgets and deficit financing to barely cope. But this is not a fundamental solution. Continuing down this path will only make Japan’s situation further deteriorate. Therefore, if the government truly wants to improve the economy, it must cut waste within the existing fiscal scope and concentrate resources into truly effective areas. This is the necessary direction,” he said.